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ANALYSTS SAY INTERNET WILL BOOM ONCE DANGERS ARE REMOVED

The Gartner Group’s Dataquest subsidiary forecasts that 82 million computers will be internet-connected by 1998 and, by 2001, the internet software and services market will be a $32bn industry. The analysts say it is increased internet usage in the business sector that is driving up the numbers of personal computers, a 71% increase from 1996. The market will continue to grow through the year 2001, and Dataquest says over 268 million computers will be connected to the internet. Again, they attribute this exponential growth to the business market. Businesses that already pay for desktop computers for employees increasingly recognize the incremental benefit of adding internet access, says Kathryn Hale, principal analyst for Dataquest’s internet and Enterprise Strategies Worldwide programme. She adds: Within two years, extranet access will become increasingly important for business PC users, just to get the job done… by 2001 it will become nearly pointless to pay for an employee’s desktop computer without including internet access. Accompanying this dramatic growth in internet users is an internet software and services market, forecast to grow by 60% in 1997, and generating $12.2bn revenues, up from $7.5bn last year. By 2001, Dataquest predicts the Internet software and services market will be over $32.2bn. At $7bn in 1997, the services market is nearly 12 times the size of the internet software market, and services are moving towards $29bn by 2001, says Hale. Annual fees per active seat are headed downward from $147 in 1996 to $108 in 2001, but the rapid growth in the number of seats points to a market opportunity worthy of the largest telecommunications company. A recent survey of 930 respondents by World Research Inc suggests that Dataquest is correct.

Re-invention of the enterprise

Electronic commerce will generate big revenues and profits, but it’s still seen as a risky business by most users. Of respondents, 70% say that security for e-commerce is inadequate at present. They believe that it is no more secure than providing a credit card number over the web and the overriding objection to e-commerce is the possibility of being robbed by internet hackers or pirates. Other obstacles cited are a lack of choice and the problem of not being able to see or touch the products. Assuming security concerns are allayed, respondents say that the most likely purchases are computer software, followed by airline tickets and music or videos. Gregory Harmon, director of research for the San Jose, Californian research group, believes: Once internet users perceive that security issues have been resolved, e-commerce should explode. Similarly, The Aberdeen Group’s new report is entitled The Dollars and Sense of the New Electronic Commerce: Business-to-Business Electronic Commerce in Transition. The author, David Alschuler, concludes: New electronic commerce is leading the re-invention of large portions of the enterprise and its business application environment using internet technologies to deliver applications which support re- engineered, more effective business process models. He adds: This is a business and technology transition which has parallels in the shift from mainframe to client-server architectures and is likely to be equally significant. The report proposes an analytical framework through which electronic commerce products and suppliers can be compared, with a special focus on procurement-to-purchase process automation and EDI. Seventeen suppliers are profiled. The report costs $1,495 per copy and can be ordered from Aberdeen’s Web page at www.aberdeen.com.

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CBR Staff Writer

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